India's IT ministry may finally end electronics manufacturing policy logjam

The ministry is mulling on the policy for very large projects, Aruna Sundararajan said if somebody comes up with a Rs 50,000 crore investment, he/she may not be looking at that Rs 10,000 crore subsidy, he would want a lot moreSurabhi Agarwal | ET Bureau | Updated: September 09, 2016, 14:41 IST

The ministry of electronics and IT is firming up the investment threshold for a policy that incentivises manufacturing of electronics. Aruna Sundararajan, the newly-appointed secretary of the ministry told ET that they will come up with a number in a few weeks, which should end the logjam.

ET had reported Tuesday that the M-SIPS (Modified Special Incentive Package Scheme) framework is set for a revamp after a prolonged tussle between the Department of Electronics and Information Technology and the finance ministry.

The latter had raised concerns over the lack of clarity in the quantum of subsidy outgo under the open-ended policy which is valid till 2020.

"The finance ministry did raise a few concerns; one of their concerns was what is going to be your benchmark to say when this scheme will reach maturity. Also, for very large companies, they said how many such companies can you actually bring in and what else can you do for them apart from just giving subsidy. They also wanted a sectoral cap," said Sundararajan.

She added that the ministry is now working to see what will be a realistic level of investment. The ministry is mulling on the policy for very large projects, she said adding that if somebody comes up with a Rs 50,000-crore investment, he/she may not be looking at that Rs 10,000 crore subsidy from you, he would want a lot more. "We need to understand what that something is, which will incentivise them," she said.

The M-SIPS policy incentivises companies to manufacture domestically by providing them a 20-25% subsidy on capital expenditure.The hiatus had upset an industry that had started to look at India as a manufacturing hub.

So far, proposals worth Rs 18,000 crore have been approved under the programme with an estimated subsidy of around Rs 4,000 crore to be paid over the next 10 years.